We specialize in valuing small, owner-operated businesses with annual sales of less
than $5 million. In fact, over 40% of our valuations involve businesses with annual
sales of less than $500,000. Over 60% of our valuations are related to the buying or
selling of a business, and are used to make critical decisions like: whether to buy or
sell, how much to offer or accept, and how much to lend. In these situations,
valuations must be realistic and reasonable to be of any value.
Small, owner-operated businesses are different than larger companies. Obviously,
they are smaller (revenue, assets, employees, locations, territories, etc.) and they
operate according to a unique agenda set by their owner(s). Although general
valuation concepts and theories still apply, the data and methods used must be
relevant and adapted to accurately value a small business. Unfortunately, many
valuation firms apply the same data and methods they use for larger companies.
How to Tell if a Small Business Valuation is Done Right
• Is it performed & signed by an experienced CPA who is Accredited and/or
Certified in Business Valuation, and has lots of valuation experience?
• Is it performed by a firm that specializes in valuing small businesses?
• Does it follow the Statement on Standards for Valuation Services (SSVS)
published by the American Institute of CPAs?
• Does it apply methods from all 3 valuation approaches - market, income & asset
• After reviewing the report, do you understand what was done and why? Does it
• Is it based on reliable data from privately owned businesses, NOT large public
companies that have nothing in common with small, owner-operated businesses
• Is it based on actual business results NOT unreliable, low-quality projections
prepared just for the valuation?
• Does it use a “real-world” small business buyer’s perspective, NOT a mythical
• Does it provide a realistic, reasonable value?
• Is it reasonably priced - what good is it if you can’t afford it?